Biodiesel: The EU Commission Opens an Investigation Against Possible Circumvention of Anti-Dumping Measures by the US

The conflict between the European Union (EU) and the United States regarding the situation of dumping created by the US imports of subsidised biodiesel into the EU has just reached another level.

In today's Official Journal of the EU (OJ L 211 of 12.8.2010), the Commission has adopted two regulations opening for an investigation regarding the possible circumvention of countervailing measures imposed in 2009 to biodiesel products originating in the United States. Following the adoption of Council Regulation (EC) No. 598/2009 of 7 July 2009, anti-dumping and countervailling measures were adopted on imported biodiesel for a duration of 5 years on the grounds that:

"biodiesel, and all blends, [...] produced in the US and exported at subsidised price to the Community had affected the economic situation of the biodiesel producers in the Community" (para. 33). Similarly, and in addition to the fact that "the subsidised import volumes from the USA increased significantly during the period analysed," "there was also a clear coincidence in time between the surge of subsidised imports and the deterioration of the economic situation of the Community industry. That industry was not able to set its prices in line with market conditions and the cost increases, as its prices were undercut during the IP by the subsidised imports" (para. 132).

One year later, the European Commission received on 30 June 2010 a request lodged by the European Biodiesel Board (EBB) based on Article 13.3 of Council Regulation (EC) No. 1225/2009 of 30 November 2009 on the protection against dumped imports from countries not members of the EC.

EBB was suspecting the United States of exporting biodiesel products by way of circumvention. The specificities of the product under investigation, biodiesel, are defined in Section B of the Regulation (UE) No. 720/2010 of 11 August 2010 initiating the investigation:

"The product under investigation is fatty-acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/or hydrotreatment, of non-fossil origin, commonly known as 'biodiesel', in pure form or in a blemd containing by weight more than 20% of fatty acid mono-alkyl esters and/or paraffinic gasoil obtained from synthesis and/hydro-treatment, of non-fossil origin, consigned from Canada and Singapore and biodiesel in a blend containing by weight 20% or less of fatty-acid monoalkyl esters and/or paraffinic gasoil obtained from synthesis and/or paraffinic gasoil obtained from synthesis and/or hydro-treatment, of non-fossil origin, origintaing in the United States of America ..."

As a result, by Regulation (UE) No. 720/2010, the European Commission has decided to investigate whether there was circumvention of the anti-dumping mesaures defined in Council Regulation (EC) No. 599/2009 on imports of biodiesel originating in the United States by imports of biodiesel consigned from Canada and Singapore. The Commission is now suspecting that the anti-dumping measures on imports of biodiesel from the US are being circumvened by means of the transhipment of biodiesel via Canada and Singapore and by exports of biodiesel in a blend containing by weight 20% or less of biodiesel. (para. D. Grounds)

The manner to export biodiesel seems to have changed after the adoption of the anti-dumping measures in 2009. The main element in these modifications consists in the transhipment of biodiesel from the US via Canada and Singapore. The other ground relates to a suspected modification of the exported products to avoid the threshold limit of 20% biodiesel in blended biodiesel (which was used to distinguish products in the preliminary investigation, see Regulation (ec) No.598/2009). Finally, it looks like the volume of the previous US exports have been replaced by exports via Canada and Singapore of biodiesel in blends containing 20% or less of biodiesel at lower prices. The Commission could add new grounds along its investigation.

The core question in the investigation is to know whether the circumvention of anti-dumping measures was intended. If not, the measures could eventually benefit from exemption rules as defined in Article 13.4 of the Council Regulation (EC) No. 599/2009. Nevertheless, the imports of the investigated products must be registered in order to allow the application of possible anti-dumping duties with retroactive effects in the situation where the Commission's investigation concludes that there is circumvention.

The Commission has nine months to proceed to the investigation. Parties will be audited and questionnaires will be sent to both national authorities and interested parties, including the exporters/producers and associations of exporters/producers in Canada, Singapore and the United States.

It should be reminded that such procedures are based on the rules of the WTO, as enshrined in the Agreement on Subsidies and Countervailing Measures of 1994.

References:

• Commission Regulation (EU) No. 720/2010 of 11 August 2010 initiating an investigation concerning the possible circumvention of anti-dumping mesaures imposed by Council Regulation (EC) No. 599/2009 (OJ L 211 of 12.8.2010, p.1);
• Commission Regulation (EU) No. 721/2010 of 11 August 2010 initiating an investigation concerning the possible circumvention of countervailing measures imposed by Council Regulation (EC) No. 598/2009 (OJ L 211 of 12.8.2010, p.6);
• EBB press release of 12.8.2010.